Cytori's Celution to the Aging Face--Make it New Again

A picture is worth 1,000 words:

The face of a 55 year old office manager before a stem cell enhanced face lift performed by Dr. Aamer Khan in the UK:

Three months later:

Just one application in a platform of potential therapies that could make Cytori Therapeutics the story stock of the next decade. You can see the entire story here. Do your own due diligence.

China Green Agriculture: A Green Growth Story

Those who had the opportunity to see any part of the 2008 Beijing Olympics, observed the sophistication of the world's most populous country. A country with a long and great culture and currently with the fastest growing economy in the world.

Along with this rapid growth has come numerous environmental issues, as evidenced for example, by the terrible smog problem in Beijing. Fortunately, as living standards have improved, China's leaders are now beginning to get serious about environmental sustainability. One of environmental issue makes China Green Agriculture (CGA, $15.00) a compelling story, in my opinion, is the overuse of chemical fertilizers that is has prolonged long term negative implications on soil quality and sustainability. As a result, the obvious concerns of China's ability to feed its population puts CGA in an enviable position.

CGA develops, manufactures and distributes humic acid liquid compound fertilizers in 21 provinces, 4 autonomous regions and 3 municipal cities in China. Humic acid is an essential natural and organic material needed for well balanced fertile soil. CGA gets all its humic acid from from weathered coal, a cheap and abundant material in China. The primary value of CGA's franchise lies primarily in its significant research and development program. CGA's research program is unique in that is self financed. CGA tests and formulates its compounds in intelligent greenhouses and actually sells the produce it grows during the process to finance its R&D costs. CGA has a healthy balance sheet with no long term debt, very healthy margins and sells at a forward P/E of only 10.

CGA's recent shelf offering, that raised $24.5 million to finance its expansion plans, have put pressure on its share price making for a very attractive entry point, in my opinion. At these levels (around $15), the market is overlooking the very favorable news that China Green Agriculture released on November 18, 2009 that will be a catalyst for earnings improvement on top of its growth potential. The Chinese government gave CGA a 5 year exemption from a 13% value added tax due to the organic nature of its product. This tax relief goes right to the bottom line in the form of a 3-5% margin improvement, according to Mr. Tao Li, Chairman and CEO. The benefits of this exemption seem to have been overtaken by the usual concerns of dilution following to the company's recent private placement. This represents an opportunity, IMHO.

China Green Agriculture has extensive resources on its website for those interested in doing their own due diligence. Here are a couple of links I found useful:

CGA Fact Sheet
CGA Investor Presentation

I've been purchasing CGA this morning at these levels but I urge all those considering an investment to do their own due diligence.

Cytori Poster Presentations from San Antonio Conference Now Available

Here are the links to the Posters that were presented at the San Antonio Breast Cancer Symposium on Saturday December 12th by Cytori Therapeutics:

Restore II - Stem Cell Breast Reconstruction

Adipose Derived Regenerative Cells - Pre-Clinical Growth Factor

The internet certainly makes performing your own due diligence rather easy, doesn't it?

Cytori's Restore II 6 Month Clinical Data Very Encoraging

Today, Cytori Therapeutics released the 6 month interim Clinical Phase II results of one of the many potential applications of its Celution technology that extracts stem and regenerative cells from a patient's own fat tissue (adipose). The Restore II trial was related to the treatment of cell enriched breast reconstruction and was presented at the San Antonio Breast Cancer Symposium. The results where very promising and showed a high level of patient satisfaction. No need for me to interpret the results when you can read the press release here. The clinical data is presented in a video interview and is a must see if you really want to get a better understanding of the clinical results. Cytori also issued a complementary second press release today that that supported the safety of cell enriched fat grafting.

Followers of the Sirtuin Investor know that Cytori Therapeutics was first featured here on September 9, 2009 when CYTX was selling about $3.20 per share. Although I had been following the company for a couple of years it seemed to me that this was the time when the risk/reward characteristics of CYTX, as an investment, looked the most promising. In the September 9th entry, the investment case that was laid out for Cytori was not one based upon a single therapy for a single ailment but on a platform of therapies where doctors around the world could potentially treat multiple ailments and improve upon many cosmetic procedures. To keep thinks in perspective this is just one of those therapies. I urge all those that are new to Cytori go back to that entry as part of their due diligence process to get the bigger picture.

Things continue to look promising for Cytori Therapeutics.

Apollo Commercial Real Estate Finance? If not now...When?

Ever since the onset of the financial crisis, it has been in the back of my mind that there will come a time when it will make sense to put some money in commercial real estate finance in order to earn a healthy current yield with the potential for long term appreciation. As anybody who has access to any business channel knows, the commercial real estate market reached a tremendous bubble a couple of years ago that continues to burst. The ability to refinance these properties is extremely difficult at this time and this represents an opportunity in my opinion. With short term interest rates at near 0% and long term bond rates at levels too low to compensate for the risk of rising interest rates, I believe that now may be the time to take the plunge into the secured commercial real estate market.

The vehicle I have chosen to use to make this investment is Apollo Commercial Real Estate Finance (ARI $17.60), a REIT that IPO'd at $20 on 9/23/09 . I've built up a position in the $17.25-$17.50 range. Why did I chose this vehicle to gain exposure? There are a few reasons:

1. Apollo is a large well respected money manager with seasoned professionals that will invest in senior secured commercial real estate loans, etc.
2. ARI currently trades at a healthy discount to net asset value. ARI IPO'd at $20 per share. Knock off $.50 to pay the underwriters and essentially what you have here is $19.50 in cold hard cash that can be purchased for below $18 per share. Nice discount that effectively boosts your yield to above the actual yield of the portfolio once it is constructed.
3. Since this is an IPO, there is no concern as to the valuation of assets already on the balance sheet. No concerns about buying mismarked assets.
4. When I listened to the road show a few months ago, I recall the expected yield of the portfolio of commercial mortgages and CMBS investments was expected to be in excess of 12%. Not bad for a secured medium term investment as commercial real estate loans typically have 5 year effective terms.

In my opinion, now is the time to take the plunge although this is not an investment that one should expect a quick pop. . Since there has been no information released by the company, to date, and the dividend yield is still unknown the NAV has drifted to a substantial discount that will not likely last long. Read the IPO and do your own DD. Conference call at 11:20 AM today (sorry for the short notice) might get the shares moving.

Quadramed - Gets $8.50 Cash Buyout Offer

Today, Quadramed (QDHC) became the second stock profiled by the Sirtuin Investor to receive an all cash buyout offer. While it wasn't at the 100% premium that Sirtris Pharmacueticals obtained from Glaxo last year, at $8.50 cash per share it represents a healthy 33% premium over Quadramed's closing price of $6.41 and a 93% annualized return since the company was profiled by Sirtuin Investor on July 28, 2009. It's difficult to determine if a bidding war will start but it is certainly a possibility.

Congratulations to all who did their own due diligence and purchased shares.

Quadraned Snags Another McKesson Executive

Quadramed today announced the appointment of Michael J. Simpson, a former McKesson executive, to the post of Senor Vice President, Product Strategy and Development. As part of his signing, he was granted warrants controlling 90,000 shares of QDHC common stock. He becomes the second executive, along with CEO Duncan James, to be brought on by the Quadramed Board of Directors from McKesson, a $16,000,000,000 health care and information technology behemoth. In my view, this is another good sign that the Board of Directors is serious about turning this company around after a prolonged period of lackluster results. To learn more about my reasons for owning QDHC NOW read my blog entry dated July 28, 2009. Quadramed hasn't done much since my profile on it last July, but I do believe it is well positioned to take advantage of the billions of Obama dollars put forth in the stimulus package with the goal of automating the health care industry. Apparently so do two former executives of McKesson. Do your own DD.

Cytori Insider Buying Continues as Shares Rise

Trading and investing decisions are often driven by the psychological battle between fear and greed, confidence and doubt. You do your due diligence, you study financials and examine valuation and most importantly make your assessment of a company's future prospects. You finally make the decision to pull the trigger and you feel good about it because you know you've done your homework. Next day. the overall market takes an unexpected steep decline and all your due diligence becomes irrelevant. Self doubt gnaws at you and you realize that all your analysis doesn't matter if your investment is floating on a tide that continues to retreat. Well this is what the investing textbooks call "systematic risk" and there is not much you can do about it other than to buy expensive insurance on the entire market or just stay out completely.

On the other hand, there is the risk related to the particular company you just did your due diligence on. With regard to Cytori Therapeutics, a company that has been covered extensively on this blog (see below), while the potential is incredible, the risks are still there. There is always a lot that can go wrong. Are the clinical trials really going well? Are sales ramping up as they should be? Can the company raise capital as it needs it? Is there some unexpected side effect that suddenly turns up? As an outside investor, you are always at a disadvantage, especially in a story stock whose story hasn't really started yet that can always take an unexpected turn in an unforeseen direction. You can't possible know as much as the insiders or the hedge funds that ignore the rules in pursuit of illegal insider information. That is why when a speculative stock like Cytori continues to enjoy buying interest from insiders, even as the stock makes a strong move upward, one must take notice. This continued insider buying effectively lowers the risk that anything beyond the limited view of the of the average investor could be amiss. In the last few weeks, even as CYTORI stock has rallyed from a low of $3.08 to $4.25, insider buying has continued buy one director:

• 11/18/2009 Paul Hawran-Director Bought 20,000 shares @$4.24
• 11/17/2009 Paul Hawran-Director Bought 5,000 shares @$3.98
• 11/12/2009 Paul Hawran-Director Bought 10,000 shares @$3.50

In my view this is a strong indication that the clinical trials are going well and that the inflection point discussed by Cytori management is for real. Do your own due diligence.

Cytori Therapeutics - The Story is Getting Out

In my September 9th entry on Cytori Therapeutics, I focused on a company with an exciting platform for delivering multiple stem cell therapies and a compelling, easy to understand, story.

Now, even as the stock of Cytori Therapeutics has drifted lower over the last couple of weeks, the story certainly seems to be spreading. Ironically, the media interest is not necessarily related to the potential as a therapy to repair damaged hearts, cure incontinence or treat periodontal disease but as a natural alternative to breast implants.

While the Cytori's stem cell extracting Celution machine has been approved for use in Europe and Asia for therapeutic purposes, it is approved only for research purposes by the FDA in the U.S. However, that little detail hasn't stopped a handful of surgeons, who see this as the next great big thing in cosmetic surgery, to commence the use of the Celution in cosmetic therapies, without a requirement for FDA approval.

The idea of taking fat from one part of the body and replanting it into one's breasts, with a stem cell nourishment that enhances its stability, is not only an irresistible concept to women across the world but its a great lead in story to media outlets across the nation. In recent conference calls, Cytori disclosed that it earns $2,500 per procedure on the disposables used in each procedure. The Celution machine itself sells for about $100,000. So, while this is truly a great story that alone can be feed a stock price, the economics for Cytori seem to be in place as adipose stem cell therapies catch on.

Here are a couple of examples of the story starting to spread in the U.S. by a single doctor in Arizona:

How long will it be before we see the same stories in the bigger media markets of New York and California and, of course, national news networks. Women across the nation are sure to be clamoring for this procedure (if of course they can afford it).

Just to put things in perspective, let's not forget there are several more medically critical potential therapies of Cytori's platform other than natural breast enhancement. This is just the beginning of the story, in my opinion and as I stated in a previous entry, I do own Cytori stock and I recently picked up some warrants (CYTXW) so I am not unbiased. I impatiently wait along side other Cytori shareholders for irrational exuberance to turn a legitimately promising story into something even bigger. Do your own DD and decide for yourself.

NY Times Article Updates Srtris Pharama Progress

Interesting update covering a conference on aging at Harvard university. Click here:

What's Up With Resveratrol??

As many long time followers of this blog know, the Sirtuin Investor originated on December 1, 1997 to follow the progress of resveratrol as the basis of new therapies and longevity and to try and make some money by following the companies involved in this pursuit. The word "sirtuin" is the enzyme that is stimulated by the resveratrol molecule in the body and is believed to provide health benefits to the body and potentially slow down the aging process. Sirtris Pharmacueticals, the leading company that created all the excitement surrounding resveratrol, IPO'd in May 2007 at $10 per share and was closely followed on this blog. In August 2008, Sirtris was acquired by GlaxoSmithkline PLC for $22.50, representing an annualized return of over 100% since the IPO, making many readers of this blog happy yet, at the same time, somewhat ambivalent that the long term investment thesis of the Sirtuin platform never had the opportunity to develop (i.e a possible 10-bagger) . Since then, this blog has focused on a handful of exciting, yet sometimes highly speculative, investment ideas and will continue to do so to try and find ideas that can fund a long life. However, at this time the Sirtuin Investor would like to take a step back and focus on resveratrol usage once again with two new polls:

What is your daily dose of resveratrol?

How has resveratrol helped you?

If you have ever used resveratrol please vote!

Cytori Stem Cell Platform Expands

Last week I wrote about the many potentials of Cytori Therapeutic's Celution system that extracts stem and other regenerative cells from a patient's own fat cells. Today, the potential for the expansion of the platform to treat gum disease was highlighted in pre-clinical study results released in a press release from Cytori. The results suggest that the use of uncultured fat derived regenerative cells significantly improved the effects of periodontal disease, evidenced by significantly improved alveolar bone healing and decreased gingival (gum) invasion of the defect.

Of course, this data is pre-clinical in nature and must pass clinicical trials in humans. However, it illustrates my underlying investment thesis on the vast potential of Cytori's PLATFORM:

ONE MEDICAL TECHNOLOGY-----> MULTIPLE POTENTIAL APPLICATIONS

I expect more positive data over the next six months and believe the stock will react positively.

These are the personal views of The Sirtuin Investor. Do your own due diligence.

Cytori Therapeutics - Irresistible Stem Cell Story?

Although the issue is on the back burners of the news these days, remember all the controversy surrounding embryonic stem cells? Is it morally acceptable to use discarded embryos to procure stem cells for the potential treatment of life threatening diseases? Its a tough question embroiled in an emotional tug of war between religious beliefs and the needs of the desperately ill. Well, there is at least one company whose stem cell technology has shown great potential to side step this issue altogether....and its trading at levels that make it a potential 10 bagger (disclosure: I just bought a bunch of shares a few days ago).

I've been following Cytori Therapeutics for a couple of years and believe it is poised to become a big winner. I will provide a simplified summary of my thoughts on Cytori here and provide the links that will allow you do do your own due diligence.

Cytori's main product is a machine called the Celution. The Celution uses adipose tissue (also known as fat tissue) extracted from a patient's body and processes it through centrifugal and proprietary enzyme technology. The end product is a concentrated mixture of the patient's own stem and other regenerative cells that can be put to use to help treat damaged or diseased body parts. It may sound like science fiction but the Celution is already in use in Europe and Japan and is currently before the FDA for approval as a medical device in the U.S. Here are some of the bullet points that get me excited at the potential for this stock:

• THE PLATFORM: The Celution is a platform for the delivery of stem cells where the potential therapeutic applications are only limited in number by the imagination of the medical profession. (Remember the Sirtris Pharmacueticals platform previously mentioned on this blog that lead to a buyout by Glaxo at a 100% premium?) Currently Cytori is sponsoring clinical trials for the treatment of breast reconstruction and heart disease. However, others in the medical field are evaluating Celution derived cells for use in the treatment breast augmentation (bigger breasts without the silicone), periodontal disease (regrowing diseased gums), urinary incontinence (fixing leaky faucets)and other potential treatments are surely on the way. The beauty of this platform is that Cytori provides the technology and the disposables (recurring revenue stream) and the medical field works for Cytori to find the applications that have the most potential.
• HARVEST PATIENT'S OWN STEM CELL'S: Cytori's process uses a patient's own stem and regenerative cells that are extracted DURING the operation for which the stem cells will be used. No ethical issues about destroying embryos. No concerns about compatibility. No concerns about supply other than the patient's own fat level (look at your own stomach...are you a candidate?) IMHO, this is a great sell from a marketing perspective. Less worries about adverse effects or concerns about foreign stem cells.
• FDA APPROVAL PROCESS: The FDA recently determined that the Celution would be evaluated as a medical device. This was an important step in Celution's approval process in the U.S. and represents a quicker path to commercialization as opposed to being evaluated as a drug.
• SMALL MARKET CAP: At current levels (i.e. when I started writing this piece with CYTX at about $3.00), CYTX has a market cap of only $112 million compared to other stem cell stocks like OSIR (Osiris Therapeutics) at $263 million, the precieved leader GERN (Geron) at $656 million and STEM (Stem Cells) at $181 million. Yet, on a price to sales basis, CYTX is cheaper than all of them: CYTX: 7.6 OSIR: 8.7 GERN: 427 STEM: 359. I believe that the lack of publicity of Cytori's story in the U.S. is one of the major factors that have kept Cytori's value below that of its peers.
• GREAT STORY: I love a stock with a great but simple story based upon on American ingenuity. A story that can create excitement once the general public becomes aware of it. A story that is fundamentally easy to understand. The greatest gains in the market, the ones that eventually lead to irrational exuberance and skyrocketing stock prices, are often those stocks with exciting stories that are easily understandable. Cytori fits the bill, IMHO: Extract body fat...put fat into a machine to extract concentrated mixture of stem cells...reinsert cells in your damaged body part. Oprah, are you listening? Gotta love it.

Well there you have it. I only wish I had finished this entry on the day I started it with CYTX still at around $3.00 per share. Like most story stocks it jumped on a news release issued yesterday. There could be more to come. Do your own due diligence.

Quadramed (QDHC) - Microcap with Potential

I came across Quadramed Corporation (QDHC ,$6.52) by doing a database screen that focused on small cap companies with good valuation metrics little or no debt and significant insider buying. When I run this type of screen I will often come across a couple of dozen companies. Further fundamental research is required to filter thorough the list to come up with investment ideas that are worthy of my commitment. What piqued my interest about Quadramed, other than the screened criteria, was the sector it is in...software and systems for Electronic Health Records. The reason I find this industry very interesting is the great emphasis the Obama administration is putting into this area in the hope to reduce health care costs. In fact, the stimulus package passed earlier this year had approximately $19 billions set aside for health care technology. These are huge numbers that Quadramed is well positioned to take advantage of.

I will not provide a full blown research report on Quadramed but I will provide some of the numbers and reasons why I believe this company could be a double or triple within a year. No one should blindly listen to an anonymous blog (even a great one like Sirtuin Investor!) but should do there own homework (and I provide the links below to do so).

1. Market Cap: $56 million...Enterprise Value: $30 Million...yes this certainly is a micro cap. I like to keep a large portion of my assets in fixed income and make speculative but well thought out investments in under followed stocks. With a market cap so tiny, QDHC has no sell side Wall Street ANALyst coverage. I love this about a stock because if I Am correct and the company's earnings begin to accelerate, the ANALysts should take notice and provide a catalyst for stock appreciation
2. Tiny Float: 4.84 million shares outstanding. This can work both ways, making it hard to liquidate in a weak market and difficult to buy if the company starts to gain momentum on the upside. Since I believe QDHC is well positioned for growing EPS and, as a result, appreciating stock price...I love a small float. Small floats have been personally lucrative for me in the past.
3. Forward P/E = 6. According to Yahoo which I believe is coming from a single Reuters estimate.
4. New CEO: QDHC just snagged an executive from mega health care technology company McKesson to be its new CEO. His contacts should certainly help QDHC capture some of the stimulus money and his desire to move to QDHC gives me an independent opinion on QDHC prospects.
5. Insider Buying: 405,000 shares in just the last 6 months. I love insider buying in small cap stocks and, in this case, I suspect it is related to insiders' belief of how the recently passed stimulus package will stimulate new sales.
6. No Long Term Debt and Lots of Cash: $24,000,000 in cash or $2.89 per share. QDHC does have 4,000,000 share of convertible preferred stock outstanding with a conversion rate of $15 or so per share that was issued when the common stock was substantially higher in 2005. I look at this as a cheap source of financing that never has to be repaid and can possibly be bought back at a discount.
7. 1:5 Reverse Stock Split in June 2008: No one wants to own a stock that does a reverse split. A reverse split tends to drive down a stock further. However, if you are purchasing QDHC post the reverse split, you get the advantage of a lower valuation due to the the stigma of such. Remember, a reverse split, just like a regular stock split, has absolutely no effect on the finances or fundamentals of a company.
8. Recurring Revenues: I forgot the percentage but a significant portion of QDHC's revenues come from recurring maintenance and servicing contracts. Do your own DD here.

Well there you have it, an under-followed or should I say COMPLETELY IGNORED small cap stock (just look at the average daily volume) with, in my humble opinion, a compelling story. An investment in QDHC may help some of those resveratrol users that plan to live to 100 build up their nest egg (remember, Immortality is Expensive). You must, however, do your own due diligence.

Municipal Auction Investment Plan

Sorry, I haven't posted in a while as I've been focusing on making money in this volatile market. I've set up another blog with an investment idea that sophisticated Sirtuin Investor followers may want to examine. A Triple A rated debt security of a large utility with the potential to pay 18% if enough investors follow through on the plan. Click here to read about the idea.

OBAMA Budget Continues Push For Biofuels

President Obama revealed his proposed 2010 Budget that followed through on the American Recovery and Reinvestment Act of 2009 and set down a guantlet to attempt to propel the United States towards a future of cleaner energy and energy independence. The section of the budget related to the Department of Energy clearly indicates that the favoritism showed towards the oil industry at the expense of alternative energies is being reversed. Once again I point to Verenium Corpration, a pure play cutting edge cellulosic ethanol company with the backing of BP and old connections to Stephen Chu, Energy Secretary, as a company positioned to lead Mr. Obama's energy revolution. According to the Wall Street Journal, the oil industry is reeling from the new reality:

That has oil companies hopping mad. The American Petroleum Institute said
higher taxes would stifle oil-patch investment and job creation. “I don’t see
how this bolsters energy security,” API spokeswoman Cathy Landry said. BP
executive Lamar McKay told Congress Wednesday that taxing “core energy” while
subsidizing new energy would do nothing to help the nation’s energy
security.

It will be very interesting to see how this radical new direction in energy policy progresses over the next decade. Fortunes could be made by playing this policy shift correctly.

Excellent Article on State of Cellulosic Ethanol

If you are following the progress in cellulosic ethanol then you will want to read this excellent article in USA Today about cellulosic ethanol and Verenium.

WSJ: David Sinclair Screws Up

Hard to believe, even when you see it with your own eyes, that David Sinclair would become associated with a organization that sells wellness products through an Amway type sales structure. He has since ended his relationship with this organization but there he is...the star of the show, in front of the Shaklee sales force conference looking more like the combination of old style tonic salesman and a motivational speaker/preacher than a respected Harvard researcher. What could he be thinking? Hasn't he made enough money with the takeover of Sirtris Pharmacueticals by Glaxo? It makes me wonder to what extent the sale of Sirtris to Glaxo for $700,000,000 was a result of good marketing versus good science! Is this a sign of honest, unbridled enthusiasm from Sinclair or an indication of shameless greed? Take the poll at the right and express your views.